David Prosser: PM's warm words for SMEs don't match his policies

Friday 11 November 2011 10:00 BST

Click to followThe Independent Online

Here's what the Prime Minister said yesterday of his desire to support small and medium enterprise, as Britain looks for ways to renew its economic recovery: "We need this to be a country where more people think 'I can start my own business and I can sell to the world'."

It's a principle with which almost no one would disagree. There are, however, at least 25,000 people who have very good reason to complain that David Cameron does not practise what he preaches.

These are the men and women who the solar industry says could lose their jobs before Christmas as a direct result of the Government's decision two weeks ago to halve the subsidies on offer – with barely a few weeks' notice – to those who install solar panels on the roofs of their homes or businesses.

Don't take the word of solar companies for it (they're bound to be partial). The CBI complained bitterly about the cuts yesterday too, describing the move as "the latest in a string of Government own goals". And look at the announcement of Mears, the housing maintenance company, which revealed yesterday it is now closing a unit it launched to explore solar installation opportunities.

None of which is to say the feed-in tariff system – subsidised by billpayers at mounting cost – was perfect. Just that there is no point talking about encouraging people to set up their own companies – and many solar installation businesses are new SMEs – if you keep pulling the rug from underneath those who take you at your word.

As John Cridland, the director general of the CBI, pointed out last night, this Government has repeatedly held up the low-carbon sector as an example of the sort of industry on which our economy ought to concentrate its efforts. If it is prepared to act so recklessly even in a priority area, what confidence can any SME have about planning for the future?

All governments have to fine-tune policy from time to time. Yet the indecent haste this one is showing in slashing solar subsidies has shocked the industry – ministers had always planned to make changes next April, but will now make cuts next month, before the original consultation exercise on feed-in tariffs is even due to come to an end.

Businesses, particularly small enterprises without diversified streams of income, sometimes need financial support in order to flourish. But just as crucially they need certainty about the conditions in which they will be operating. The Government's intervention on solar will undermine confidence that it understands this – and prompt investors in other industries to question whether their goalposts will also be shifted once they've parted with their cash.